Chicago, IL -- Illinois Insurance Director Nat Shapo announced today that the Cook County Circuit Court issued an Order of Liquidation With a Finding of Insolvency against United Capitol Insurance Company on November 14, 2001, following the Department of Insurance's determination that the company was insolvent by more than $2.5 million. The company previously had been under an Order of Conservation dated September 12, 2001, which allowed the Director to conserve the assets of the company for the protection of claimants and creditors, pending further recommendations to the supervising court.

United Capitol is a wholly owned subsidiary of United Capitol Holding Company Incorporated, a Delaware Insurance holding corporation, which is in turn wholly owned by Frontier Insurance Company of Rock Hill, New York. Frontier was placed into rehabilitation by the New York Department of Insurance on August 27, 2001. Both companies are members of the Frontier Insurance Group.

United Capitol was originally incorporated in February 1981 as the Great Southwest Surplus Lines Insurance Company. The current name was adopted in June 1986, and the company was acquired by the Frontier Insurance Group through its subsidiary Frontier Insurance Company in May 1996. The company is licensed in three states (Arizona, Illinois and Wisconsin), but operated on a surplus lines or a non-admitted basis in Washington, D.C., Puerto Rico, the U.S. Virgin Islands and all other states. At December 31, 1999 and December 31, 2000, the company reported earned premiums of $107 million and $51 million, respectively. The company, however, has been in a runoff mode since approximately March 2000.

Any remaining business currently active in a state in which the company was licensed will be canceled thirty one (31) days from the date of the entry of the Order of Liquidation, the policy's expiration date, or when canceled by named insured, whichever occurs first. Other active policies in any other jurisdiction, were canceled upon entry of the Order of Liquidation.

The Illinois Insurance Guaranty Fund will be responsible for the covered claims of United Capitol's Illinois policyholders. The Order of Liquidation contains an injunction prohibiting suits against United Capitol outside of the liquidation proceedings.

Liquidation proceedings are being handled on behalf of the Director of Insurance by the Office of the Special Deputy Receiver, 222 Merchandise Mart Plaza, Suite 1450, Chicago, Illinois 60654, (312) 836-9500.